INSURANCE: Pretrial rulings in condo building wind damage UTPA case… Johnston.
Park Plaza Condo Association consists of people who own 35 units in The Park Plaza in Great Falls. Travelers insured Park Plaza under annual policies providing replacement cost of $13,549,116 for direct physical loss or damage to the building caused by wind-driven rain, high winds, and wind storms with the following limitations:
a. We will not pay for loss of or damage to:
(1) The “interior of any building or structure” or to personal property in the building or structure, caused by rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
(a) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
(b) The loss or damage is caused by or results from thawing of snow, sleet or ice on the building or structure.
Park Plaza alleges that since 2009 “wind and rain, driven by wind, first caused damage to the building’s walls, through which the rain then entered and caused damage to interior structures,” and that “once the wind-driven rain damaged the outside walls of the structure and the rain was driven through the damaged walls, the rain intermittently froze and thawed, causing further damages,” and that the limitations therefore are inapplicable. It contends that Travelers is liable for $4,317,181 in damages plus attorney fees and costs plus punitives for violation of the UTPA. Travelers has refused to admit coverage and has counterclaimed against Park Plaza. Trial is set for 9/16/19.
(4) refused to pay claims without conducting a reasonable investigation based upon all available information; or
(5) failed to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
§33-18-242(4) provides that an insured may recover punitives based on violation of (4) or (5) if it can show actual fraud or actual malice.
Travelers argues that Park Plaza has made no claim for actual damages under (4) or (5) and that §242 prohibits an insured from recovering punitives based on a violation of these subsections absent a showing that the violation also resulted in actual damages. However, Gleason (Mont. 2015) held that an insured may recover punitives without proving that he incurred actual damages as a result of the UTPA violations — that he need only show that he incurred actual damages “arising out of the breach of the insurance contract which gave rise to the UTPA [violation].”
Travelers argues that it conducted a reasonable investigation before denying Park Plaza’s claim, and that it denied coverage within a reasonable time after receiving its proof of loss. Park Plaza responds that the investigation was deficient because it neglected to obtain and consider “wind velocity records for Great Falls,” given that Park Plaza had claimed that wind was the dominant cause of the damage, and that a jury question exists as to whether it was reasonable for Travelers to wait 17 months to deny coverage.
“Reasonableness is generally a question of fact” for the jury. Lorang (Mont. 2008); Dean (Mont. 1994). The jury must decide whether Travelers conducted a reasonable investigation and whether it denied coverage within a reasonable time.
Travelers argues that it had a reasonable basis in law and fact for contesting Park Plaza’s claim and the amount of the claim. The Court may decide as a matter of law whether the insurer had a reasonable basis for denying a claim where the insurer’s basis in law for contesting the claim or the amount “was grounded on a legal conclusion” and no issues of material fact are in dispute. Marshall (Mont. 2018). The Court reviews the proffered evidence and legal precedent and determines whether the precedent provides an “absolute defense as a matter of law.” Redies (Mont. 2007); Jarvis (D.Mont. 2012). None of Travelers’ defenses is grounded solely on legal conclusions. Its primary defense presents a mixed question of fact and law. The facts supporting its primary defense are in dispute. Travelers argues that no coverage exists because wind was not the efficient proximate cause of the damage. It relies on testimony of its expert Richard Dethlefs, who has opined that wind played no role in causing the damage. Park Plaza’s expert John Bolton has opined that wind-caused story drift was the dominant cause of the damage.
Bolton’s opinions are relevant. Evidence of story drift may assist the jury in determining the dominant cause of the cracks in the concrete rib panels. Travelers’ expert Richard Dethlefs has testified that story drift is a scientifically established phenomenon that occurs when a lateral load is applied to a high rise causing the building to lean. Park Plaza is an 8-story building. He has testified that wind may cause story drift. NOAA wind records show high wind events (30-74 mph) in Great Falls on 1,310 days 1/09-12/16.
Bolton’s opinions regarding story drift are sufficiently reliable to be admissible. He has specialized training as an architect and has worked as an architect for a number of years. He has examined the cracks and reviewed the NOAA wind records. Although he has not attempted to measure the amount of lateral displacement experienced by the building during high winds, he bases his opinions regarding story drift on his knowledge, training, and experience as an architect. He has testified that he personally experienced story drift while standing on the roof of the Park Plaza 10/12/16 and 10/13/16. NOAA data reveals that gusts of 27-29 mph occurred on those days. His opinions satisfy the Daubert relevance and reliability standards.
Travelers argues that his opinions fail to pass the reliability prong because he did not identify story drift as the dominant cause of the panel cracks in his reports of 2/1/17 or 4/17/17, he did not attempt to measure the actual amount of story drift during a high wind event, and his 12/17/18 Declaration contains statements that contradict statements in his deposition. All of these challenges go to weight of his testimony, not admissibility. Travelers may raise its challenges during cross of Bolton. The jury will decide how much weight his testimony deserves.
Wind and wind-driven rain would qualify as a fortuitous occurrence if Park Plaza can show that it did not know in 4/09 that the wind or wind-driven rain would cause the type of loss for which it now seeks to recover damages.
The Court will instruct on the efficient proximate cause rule as defined under Montana law.
The phrase “events occurring during the policy period” is ambiguous when applied to the progressive and incremental loss that occurred and must be construed broadly in favor of coverage. When wind or wind-driven precipitation causes a continuing and progressive loss that continues through multiple policy periods, the wind or wind-driven precipitation would qualify as an “event occurring” during the policy period.
Park Plaza is not required to prove the monetary loss attributable to a particular wind or wind-driven precipitation event or policy period, but only that wind or wind-driven precipitation caused a monetary loss in excess of the $2,500 deductible during a particular policy period.
The breach of contract claim and bad faith claim shall be presented to the same jury sequentially. Park Plaza may not present evidence of alleged bad faith during the contract phase.
Park Plaza may not present evidence that Travelers poached business from its prior insurer.
Park Plaza may not present evidence that Travelers’ loss control inspector acted negligently when he inspected the building.
Park Plaza may not exaggerate the amount and type of wind that the building experienced.
An expert may comment on an opposing expert’s methodology but may not make personal attacks on an opposing expert.
Travelers may not argue that its claim is barred for failure to comply with the notice provision in the policy until it presents evidence that it has suffered prejudice.
Travelers may not discuss the relationship between Park Plaza’s lawyers and any resident at Park Plaza.
Speaking objections are prohibited.
Travelers may not comment on “attorney advertising.”
Counsel must address each other at trial through formal titles..
Zander Blewett & Anders Blewett (Hoyt & Blewett), Great Falls, for Park Plaza; Guy Rogers & Jon Wilson (Brown Law Firm), Billings, and James Derrig, Seattle, for Travelers.
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